ORDER
Altamas Kabir, J.
1. This appeal is directed against the judgment and order dated 8th October, 1985, passed by a learned single Judge of this Court on an application filed on behalf of the defendant No. 5 in Suit No. 296 of 1980, dismissing the said application, upon holding that the point sought to be raised by the defendant No. 5 could well be taken in his written statement and the trial Court could decide the point, if urged, at the hearing of the suit.
2. Certain interesting points of law have been raised in this appeal, which has been preferred by the defendant No. 5 in the suit, which makes it necessary for us to set out the material facts leading to the filing of the above-mentioned application in the suit.
3. The defendant No. 1 in the suit, National Rubber ., is an existing company within the meaning of the Companies Act, 1956. The defendant No. 5 claims to be the Managing Director of the defendant No. 1 company.
4. The defendant No. ! owned two factories and/or undertakings, one of which is located at Tangra, Calcutta, and the other at Kalyani in the District of Nadia. By two notifications dated 23rd December 1977, and 10th February, 1978, respectively, issued under Section 18AA and under Section 18A of the Industries (Development and Regulation) Act, 1951, the management of the said two factories and/or undertakings was taken over by the Central Government. It was mentioned in the said two Notifications that the orders contained therein would have effect for a period of five years, commencing from the date of their publication in the Official Gazette.
5. By the first notified order, the Central Government appointed a body of persons, referred to in the Notification as the 'Authorised Persons', to take over the management of the industrial undertaking of the defendant No. 1 at Tangra in Calcutta. By the second notified order, the Central Government appointed a body of persons, referred to in the Notification as the 'Board of Management', to take over the management of the undertaking of the defendant No. 1 at Kalyani in District of Nadia.
6. The present suit was instituted by the plaintiff, State Bank of India, on 2nd April, 1980, for a decree for Rs. 4,39,25,509.21 P. and other reliefs, against the defendant No. 1, National Rubber . and also against the appellant herein and several others in respect of certain guarantees purported to have been executed by the appellant in favour of the plaintiff Bank. On or about 26th February, 1981, the appellant entered appearance in the suit and, thereafter, made an application for certain particulars and for inspection of various documents relied upon by the plaintiff Bank. On 31st July, 1980, the defendant No. 1, National Rubber ., also entered appearance in thesuit through M/s. Datta, Chowdhury and Das Gupta, Advocate-on-record, who filed a Warrant and/or Vakalatnama dated 31st July, 1980, signed by one Nikus Kumar Sarkar, describing himself as 'Company Secretary'. Thereafter, on 10th November, 1980, a written statement was filed in the suit on behalf of National Rubber . signed by the said Nikus Kumar Sarkar, describing himself as the Secretary of the defendant No. 1 company.
7. In view of the above, the appellant herein, being the defendant No. 5 in the suit, filed an application in the suit, inter alia, for the following reliefs :--
'(a) The Warrant/ Vakalatnama dated 28th July, 1980 purported to be filed by Messrs. Dutta Chowdhury and Pasgupta purportedly on behalf of the defendant No. 1 be taken off the file and/or rejected.
(b) The purported written statement filed purportedly on behalf of the defendant No. 1 being verified by one Nikus Kumar Sarkar on or about 10th February, 1980 be taken off the file and/or rejected.'
8. On behalf of the writ petitioner/ appellant herein it was claimed that by the two above-mentioned notified orders dated 23rd December, 1977, and 10th February, 1978, the managemment of only the factories and/or undertakings of the defendant No. 1, located at Tangra, Calcutta, and at Kalyani, in the District of Nadia, had been taken over by the Centaral Government. The Management of the defendant No. 1 company, namely, National Rubber ., itself was not taken over and the management of the company continued to remain with the Board of Directors of the said company. It was contended on behalf off the appellant that since the company itself had not been taken over, the said Nikus Sarkar had no authority and/or locus standi to sign the Vakalatnama and/or the written statement on behalf of the company, describing himself as the Secretary thereof. It was, therefore, prayed that the Vakalatnama dated 29th July, 1980, executed by the said Nikus Kumar Sarkar, as also the written statementverified by him on 10th February, 1990, be taken off the file and/or rejected.
9. While the said application was pending hearing, the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984, was enacted by the Central Government, whereby on the appointed date, i.e. 14th February, 1984, the undertakings of the defendant No. I company and the right, title and interest of the said company in relation to its undertakings, stood transferred to and vested in the Central Government.
10. The learned single Judge accepted the arguments advanced on behalf of the plaintiff Bank to the effect that since the two under-takings of the defendant No. 1 company at Tangra and at Kalyani were the only undertakings of the company and the management of the same having been taken over by the Central Government, the defendant No. 1 company, for all practical purposes, had lost its independent existence, so far as the management of the company was concerned. The learned single Judge also accepted the submission made on behalf of the plaintiff Bank that the defendant No. I company having been nationalised by the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984, in terms of S. 4(6) of the said Act, it was only the Central Government which was competent to defend the company in the suit filed by the plaintiff Bank. According to the learned single Judge, since the company had only the two abovementioned undertakings and the same had been taken over by the Central Government, the provisions of S. 18B(a) of the Industries (Development and Regulation) Act, 1951, came into operation, and all persons in-charge of the management, including the persons holding office as Managers and Directors of the undertakings of the company immediately before the issue of the two notified orders, would be deemed to have vacated their offices, and in terms of S. 18B(c) of the said Act, the 'Authorised Persons' appointed by the Central Government, would for all purposes be the Directors of the undertakings, namely, the company in thepresent case. It is obvious that the leanred single Judge chose to equate the two industrial undertakings of the company with the company itself.
11. The learned single Judge rejected the submissions made on behalf of the appellant herein that despite the taking over by the Central Government of the management of the two undertakings belonging to the defendant No. I company, the company continued to retain its existence as a separate entity. In arriving at the said decision, the learned single Judge appears to have relied on the decision of the Full Bench of the Punjab and Haryana High Court in the case of Radha Ram Badrinath v. Amritsar Sugar Mills Company, reported in AIR 1978 Punj & Har 129, from which the learned single Judge extracted the following observation :--
'Wherever the reference is to an Industrial Undertaking 'being a company' or the Industrial Undertaking 'which is a company', the expressions are intended to refer to the whole of the company unless a part thereof is clearly referred to.'
12. In view of the aforesaid observations made in the above case, the learned Judge held that the expressions 'Industrial Undertaking 'which is a company'' included within its scope the expression 'Industrial Undertaking 'which is owned by a company''. According to the learned single Judge, all the three aforesaid expressions used in the different Sections of the Industries (Development and Regulation) Act, 1951, really indicated industrial undertakings belonging to a company, and not a firm or other proprietary concern. The learned single Judge was, therefore, of the view that once the management of an undertaking 'of a company' was taken over by the Central Government, under the provisions of the above-mentioned Act, the management of the company itself was also taken over.
13. In the above premises and in view of the enactment of the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984 (Act XVII of 1984),hereinafterreferredtoas the'Nationalisation Act', the learned single Judge held that the points urged on behalf of the appellant had become academic and all the pending suits against the defendant No, 1 company in terms of S. 4(6) of the Nationalisation Act would be continued and/or defended by the Central Government on behalf of the company, and, accordingly, dismissed the said application filed by the defendant No. 5 in the suit.
14. It is against the said order of dismissal that this appeal has been preferred by the said defendant No. 5.
15. Mr. Bimal Krishna Chatterjee, learned Advocate appearing on behalf of the appellant, submitted that the only point which was required to be considered in the appeal was to as to whether Nikus Kumar Sarkar had the authority to represent the defendant No. 1 company and to sign the Vakalatnama and/or verify the written statement on its behalf.
16. Mr. Chatterjee submitted that from the very wording of the two notified orders, it would be amply clear that only the management of the undertaking of the defendant No.1 company had been taken over by the Central Government and not the management of the defendant No. 1 company as a whole. Mr. Chatterjee submitted that notwithstanding the passing of the two notified orders, the company continued to exist as a separate entity. Mr. Chatterjee submitted that the same would be evident from the fact that two separate notified orders were passed by the Central Government in respect of the two undertakings of the company at Tangra and at Kalyani. Mr. Chatterjee submitted that if the findings of the learned single Judge were to be accepted, then, in that event, immediately after the issuance of the first notified order dated 23rd December, 1977 under S. 18AA of the Industries (Development and Regulation) Act, 1951, hereinafer referred to as the 'said Act', the management of the company itself would have vested in the Central Government and it would not have been necessary for the Central Government to have issued the second notified order dated 10th February, 1978, in respect of the company's undertakingat Kalyani. Mr. Chatterjee submitted that the very fact that a second notified order had to be published by the Central Government, in respect of the company's undertaking at Kalyani, goes to show that the company continued to exist, despite the issuance of the first notified order under S. 18AA of the aforesaid Act. Mr. Chatterjee submitted that the above position would be made further clear from the provisions of the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalistion) Act, 1984, where a clear distinction has been made between the undertakings of the company and the company itself.
17. Referring to the relevant provisions of the Industries (Development and Regulation) Act, 1951, Mr. Chatterjee pointed out that the expressions (1) Industrial undertaking 'being a Company', (ii) Industrial undertaking 'which is a company' and (iii) Industrial undertaking 'owned by a company', had been used in different sections of the aforesaid Act in different contexts. Mr. Chatterjee submitted that each of the said three expressions had a distinctly separate meaning and the learned single Judge had committed an error in equating the three different expressions to mean the same thing. Mr. Chatterjee pointed out that in S. 18A the expression which has been used in the Explanation is 'Industrial undertaking which is a company'. In S. 18AA(3) the expression used is 'Industrial undertaking owned by a company'. The expression used in S. 18B(1)(c) is 'Industrial undertaking which is a company'. The expression used in S. 18E(1) is 'Industrial undertaking being a company'. Mr. Chatterjee submitted that each of the said three expressions had been used by the legislature with a definite object in mind and it would be a fallacy to hold that the said three expressions had been used loosely by the legislature to mean the same thing. According to Mr. Chatterjee, the use of the expression 'Industrial undertaking which is a company' in the Explanation to S. 18A of the aforesaid Act, shows that the legislature intended to differentiate between the 'Industrial undertaking of a company' and an 'Industrial undertaking which is a company', as otherwise, the Explanation to Section 18A would become meaningless. The same argumentholds good in respect of the expression 'Industrial undertakings owned by a company' used in S. 18AA(3) of the aforesaid Act. According to Mr. Chatterjee, the difference between S. 18A and S. 18AA of the Industries (Development and Regulation) Act, 1951, is that under S. 18A the Central Government could issue a notified order to take over the management of the whole or any part of an industrial undertaking if the Central Government was of the opinion that :
(a) An industrial undertaking had failed to comply with the directions given to it under S. 16 of the aforesaid Act, or,
(b) Upon investigation it is found that industrial undertaking was being managed in a manner highly detrimental to the schedule industry concerned or to public interest.
Section 18AA empowers the Central Government to take over the management of an industrial undertaking without holding any investigation as envisaged under S. 15 of the aforesaid Act.
Mr. Chatterjee further submitted that the effect of S. 18B was that on the issue df a notified order under S. 18A, all persons in charge of the management, including persons holding office as Managers or Directors of the industrial undertaking immediately before the issue of the notified order, would be deemed to have vacated their offices. According to Mr. Chatterjee, the said provision was confined to the management of the undertaking only and not to the management of the company, where the industrial undertaking was 'owned by a company'. Mr. Chatterjee submitted that such provision was necessary since in cases where the undertaking was owned by a company, it would be necessary for the Central Government to arrange for its management dehors the existing set up of the company itself. Mr. Chatterjee pointed out that the said distinction would be clear from the provisions of Cl.(e) of sub-sec. (1) of S. 18B itself, whereby the persons authorised to take over the management of an industrial undertaking 'which is a company' would for all purposes be the Directors of ihe industrial undertakingduly constitued under the Indian Companies Act, 1913, and would alone be entitled to exercise all the powers of the Directors of the industrial undertaking, where such powers were derived from the said Act or from the Memorandum or Articles of Association of the industrial undertaking or from any other source. According to Mr. Chatterjee, such distinction would not have been necessary, if the provisions of S. 18B(1)(a) were applicable to all industrial undertakings covered by the three expressions referred to hereinabove.
18. Mr. Chatterjee further submitted that similarly the provisions of S. 18E(1) of the said Act were applicable only in respect of an industrial undertaking 'being a company' and not to industrial undertaking 'owned by a company'.
19. Mr. Chatterjee submitted that the intention of the legislature in using the three different expression, while referring to an industrial undertaking, the management of which was to be taken over by the Central Government, would be further clear from the provisions of the Inchek Tyres Limited and National Rubber Manufacturers Limited (Nationalisation) Act, 1984. Mr. Chatterjee referred to the preamble of the said Act which provided for the acquisition and transfer of the undertakings of Inchek Tyres Limited and the defendant No. 1 company herein, with a view to secure proper management of the said undertakings so as to subserve the interest of the general public. Mr, Chatterjee pointed out the reference made in the preamble to the take over of the management of the undertakings of the defendant No. 1 company under the provisions of the Industries (Development and Regulation) Act, 1951.
20. Mr. Chatterjee then referred to the provisions of S. 3 of the said Act which makes provision for the transfer to and vesting in the Central Government of the undertakings of the defendant No. 1 company. Mr. Chatterjee also referred to the provisions of S. 4 of the Nationalisation Act to show the general effect of vesting of the undertakings of the defendant No. 1 company in the Central Government. Sub-sec. (6) of S. 4 of the Nationalisation Act is of particular relevance andprovides that if on the appointed day, any pending litigation concerning any property which had vested to the Central Government under S. 3, instituted by or against the defendant No. I company, was pending, the same would not abate but could be continued, prosecuted or enforced by or against the Central Government, or where the undertakings vested under S. 6 or S. 7 in an Existing or a new Government company, by or against such Government Company.
21. Mr. Chatterjee next referred to the provisions of S. 5 of the Nationalisation Act. S. 5(1) of the said Act provides that every liability, other than the liability specified in sub-sec. (2), of each of the two companies, to which the Act applies, in respect of any period to the appointed day, would be the liability of the concerned company and would be enforceable against the said company and not against the Central Government, or where the undertakings of the two companies vest in an existing or a new Government company, against such Government company. S. 5(2) provides that any liability arising out of materials supplied to either of the two companies after the management of its undertakings had been taken over by the Central Government, would, on and from the appointed day, be the liability of the Central Government or of the existing or new Government company and would be discharged by that Government or as the case may be, the existing or new Government company, as and when the payment of such supplies became due and payable.
22. Mr. Chatterjee submitted that the provisions of sub-sec. (6) of S. 4 and the provisions of sub-sec. (1) of S. 5 make it amply clear that the legislature intended to differentiate between the company itself and its undertakings, and the learned single Judge was wrong in holding that the company itself had been nationalised. Mr. Chatterjee laid emphasis on the provisions of sub-sec. (1) of S. 5, which according to him, clearly envisaged the continued existence of the company. In support of his aforesaid contentions, Mr. Chatterjee relied on two decisions of the Supreme Court, as well as the Full Benchdecision of the Punjab and Haryana High Court, which had been relied upon by the learned single Judge.
23. The first of the two cases referred to by Mr. Chatterjee is the case of Rustom Cavasjee Cooper v. Union of India, reported in : [1970]3SCR530 . The said case arose out of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1969. One of the issue decided in the said case was the right of the banks named in the said Act to continue with business other than banking. The Supreme Court held that by virtue of the provisions of S. 15(2)(e) of the aforesaid Act, . the named Banks were given the right to carry on business other than banking. Mr. Chatterjee submitted that notwithstanding the acquisition and transfer of undertakings of the named Banks, the said Banks retained their individual existence and were entitled to conduct business other than banking. The other case referred to by Mr. Chatterjee is the case of Hari Prasad Jayantilal and Company v. V. S. Gupta, Income-tax Officer, Ahmeda-bad, reported in AIR 1966 SC 1481. In the said case, the status of a company, consequent upon the appointment of a Liquidator in a winding up proceeding, was being considered by the Supreme Court. The Supreme Court held that notwithstanding the appointment of a Liquidator in a winding up proceeding, the company still retained its corporate existence and corporate powers and the Liquidator was merely an agent or administrator for and on behalf of the company. Tn this context, Mr. Chatterjee also referred to the provisions of S. 481 of the Indian Companies Act, 1956, which provides that when the affaris of a company have been completely wound up, or when the Court is of the opinion that the Liquidator cannot proceed with the winding up of the company, the Court shall make an order that the company be dissolved from the date of the order and the company shall be disssolved accordingly. Sub-sec. (2) of S. 481 provides that a copy of the said order is to be forwarded by the Liquidator to the Registrar of Companies within 30 days from the date of the order and the Registrar shall make a minute in his Books in respect of the disssolu-tion of the company. Mr. Chatterjee sought to emphasise that a company did not lose its existence till such time as an order of dissolution was passed and such order of dissolution was forwarded to the Registrar of Companies who was required to make necessary minutes in respect thereof in his Books.
24. Mr. Chatterjee also referred to the Full Bench decision of the Punjab and Haryana High Court in the case of Radha Ram Badrinath v. M/s. Amritsar Sugar Mills Company Ltd., reported in AIR 1978 Punj and Hary 129, wherein the Full Bench was considering the question as to whether the proceedings for winding up of an industrial undertaking which is a company, as defined in the Companies Act, 1956, could be commeno-ed or continued under S. 433 of that Act, 1956, without the consent of the Central Government required under Cl. (e) of sub-sec. (1) of S. 18E of the Industries (Development and Regulation) Act, 1951, if the management of a part only of such undertaking (one of its factories) had been taken over by the Central Government under S. 18AA(1) of the said Act of 1951. While deciding the said question, the Full Bench had occasion to consider the various provisions of the Industries (Development and Regulation) Act, 1951.
25. In the said case, the Full Bench of the Punjab and Haryana High Court was required to consider the aforesaid issue in the light of the fact that of the two undertakings of the Amritsar Sugar Mills Company Ltd., the management of the Vanaspati Ghee factory in Amritsar was taken over by the Body of Persons appointed by the Central Government under S. 18AA(1) of the Industries (Development and Regulation) Act, 1951. Mr. Chatterjee pointed out that the Full Bench was considering the aforesaid question in relation to an undertaking which itself was a company and registered as such under the Companies Act. Mr. Chatterjee submitted that the observations made by the Full Bench, upon which the learned single Judge had placed reliance, had been interpreted by the learned single Judge not in the context inwhich the same had been made by the Full Bench. Mr. Chatterjee submitted that the learned single Judge had extracted a portion of the judgment of the Full Bench and had relied on the same. Mr. Chatterjee submitted that the said observations of the Full Bench were made with reference to an industrial undertaking 'being a company' and an industrial undertaking 'which is a company'. Mr. Chatterjee submitted that the context in which the observations of the Full Bench, relied upon by the learned single Judge, had been made were different from the facts of this case, but were fully justified in the context in which they had been made. Mr. Chatterjee further submitted that the learned single Judge was clearly wrong in relying on the said observations which had been made in reference to an industrial undertaking 'being a company' or an industrial undertaking 'which is a company' and not with reference to an industrial undertaking 'owned by a company'.
26. In conclusion, Mr. Chatterjee submitted that basing his findings on a misconstruction of the observations made by the Full Bench, the learned single Judge had erroneously arrived at the conclusion that the three separate expressions used in the different sections of the Industries (Development and Regulation) Act, 1951, were all intended to mean the same thing, and that with the take over of the management of the two undertakings of National Rubber ., the management of the company itself had been taken over by the Central Government, as a result of which Nikus Kumar Sarkar, who had described himself as the Company Secretary, had full authority to execute the Vakalatnama and to sign the written statement on behalf of the aforesaid company. Mr. Chatterjee submitted that since the judgment and order passed by the learned single Judge was based on an erroneous appreciation of the decision of the Full Bench of the Punjab and Haryana High Court, the same did not reflect the correct legal position and was liable to be set aside. Mr. Chatterjee invited us to hold that Nikus Kumar Sarkar was not authorised to act on behalf of the defendant No. 1 company andthe Vakalatnama executed by him as also the written statement verified by him were liable to be taken off the file and/or rejected.
27. In reply to the submissions made on behalf of the appellant, Mr. C. R. Datta, learned Advocate appearing for the plaintiff Bank, firstly submitted that one defendant in a suit was not entitled in law to pray for the rejection of a written statement filed by another defendant. Mr. Datta submitted that each defendant in a suit was entitled to file his or her independent written statement and it was up to the learned Court concerned to consider the evidence led by the respective parties on the basis of the pleadings, in arriving at a decision in the suit.
28. Mr. Datta next contended that a share holder or director or managing director of a company may have a right to move a writ application in respect of any executive action concerning the company, which was likely to adversely affect the interest of an individual share holder or the directors or managing director of the company. In suits, however, the position is different. Neither the directors nor the managing director would have the right to represent the company in the suit unless duly authorised by a resolution taken by the Board of Directors to that effect, at a meeting duly constituted for the said purpose. Mr. Datta submitted that, in any event, the appellant could not claim to be a director of the defendant No. 1 company, much less the managing director, as claimed by him in paragraph 6 of the plaint. Mr. Datta submitted that under the provisions of S. 269 of the Companies Act, 1956, the appointment of a managing director would only continue for a specific period of years. Mr. Datta submitted that Ss. 255 and 256 of the aforesaid Act provided that directors of a company are to retire by rotation at every Annual General meeting. According to Mr. Datta, in view of the said provisions, the appellant could not claim to continue to be either a director and/or the managing director of the defendant No. 1 company. In support of his said submission, Mr. Datta relied on two decisions, one of the Bombay High Court and the other of this Court, Mr. Datta first referredto the case of Krishnaprasad Jwaladult Pilani v. Colaba Land and Mills Co. Ltd., reported in : AIR1960Bom312 . The other case referred to by Mr. Datta is the case of Hindusthan Co-operative Insurance Society Ltd, reported in : AIR1961Cal443 . In the two aforesaid cases it was held that in view of the provisions of Sections 166, 255 and 256 of the Companies Act, a director who was due to retire by rotation at the Annual General Meeting, vacated his office at the latest on the last date on which the Annual General Meeting would have been called, and cannot continue in office thereafter on the ground that the meeting has not in fact been called. Mr. Datta submitted that the appellant could not, therefore, claim to be the managing director of the defendant No. 1 company and had no authority to represent the company. Mr. Datta submitted that since the appellant was not representing the company and the application had been made by him in his capacity as one of the guarantors, the appellant could not challenge the validity of the written statement filed by Nikus Kumar Sarkar on bahalf of the defendant No. 1 company. Mr. Datta submitted that the application filed by the appellant was entirely misconceived, as he had no right or authority to represent the company.
29. Mr. Datta then submitted that, apart from the above, the appellant could not challenge the competence of- Nikus Kumar Sarkar to represent the company so long as the two notified orders were not set aside. Mr. Datta further submitted that the appellant had. not questioned the action of the authorised persons in authorising Nikus Kumar Sarkar to act on his behalf. According to Mr. Datta, since such authorisation by the persons, who were competent to manage the affairs of the company under the two notified orders, had not been questioned by the appellant in the application filed by him, such application was liable to be dismissed on that score also. Mr. Datta submitted that on both the two aforesaid grounds, the application filed by the appellant is not maintainable and the learned single Judge had rightly dismissed the same.
30. Mr. Datta next submitted that by virtue of the two notified orders, themanagement of the two undertakings of the defendant No. 1 company had been taken over along with all its assets. Mr. Datta submitted that the effect of the two notified orders was two-fold :
(i) the existing directors and managers, including the appellant, ceased to be in office after the management had been taken over;
(ii) the authorised persons supplanted the Board of Directors and notionally they became the Board of Directors of the company and were required to comply with the provisions of the Companies Act so far as they related to the company.
31. Mr. Datta submitted that the Nationalisation Act was not really relevant for the purpose of deciding this appeal and the appeal could be disposed of without any reference to the said Act. Mr. Datta submitted that the submissions made by Mr. Chatterjee with regard to the provisions of the Nationalisation Act would have to be gone into at the time of hearing of the suit itself and not at this stage.
32. Mr. Datta submitted that the learned single Judge had very correctly held that the three expressions, referred to hereinbefore, and used in the different Sections of the Industries (Development and Regulation) Act, 1951, all meant the same thing and the intention of the legislature was only to differentiate between companies, partnership firms and proprietary concerns.
33. Mr. Datta further submitted that the undertaking of a company necessarily means the factory of the company and that the company and its factories could not be taken to be two separate entities and, in fact, formed part and parcel of the same entity. With the take over of the management of the two undertakings of the company, it must be Held that the management of the company itself had been taken over by virtue of the two notified orders, leaving only a shell which could no longer be said to represent the company itself. Mr. Datta submitted that as soon as notified orders were issued by the Central Government under the provisions of either Section 18A or Section 18AA of the Industries (Development and Regulation)Act, 1951, the provisions of Sections 18B and 18E of the said Act became operative immediately. Mr. Datta submitted that in terms of Section 18B(1)(a) and (b), as soon as notified orders were passed under the two aforesaid provisions, all persons in charge of the management, including persons holding offices of managers, directors of the industrial undertaking immediately before the issuance of the notified orders would be deemed to have vacated their offices and any contract of management between the industrial undertaking and any managing agent or any director thereof holding such offices immediately before the issuance of the notified orders would be deemed to have been terminated.
34. Mr. Datta next referred to the provisions of Section 18B(1)(e) of the said Act and submitted that under the provisions of Section 18B(1)(e) the authorised persons under Section 18A and/or 18AA of the aforesaid Act, authorised to take over the management of the industrial undertaking, would for all purposes be the directors of the industrial undertaking duly constituted under the Companies Act, and would alone be entitled to exercise all the powers of the directors of the industrial undertakings, where such powers are derived from the said Act or from the Memorandum or Articles of Association of the industrial undertaking or from any other source. Mr. Datta emphasised the fact that an industrial undertaking could not ofits own have a Board of Directors for its management and that the necessary implication was that the industrial undertaking referred to in Section 18B(1)(e) meant the company itself. The industrial undertaking could, not be separated from the company itself, as otherwise the reference to the 'Memorandum or Articles of Association of the industrial undertaking', would have no meaning.
35. In continuation of his aforesaid submissions, Mr. Datta referred to the provisions of Section 18E of the said Act, which also provides that where the management of an industrial undertaking 'being a company', as defined in the Indian Companies Act, is taken over by the Central Government, then notwithstanding anything contained in the saidAct or in the Memorandum or Articles of Association of such undertaking, it would no longer be lawful for the share holders of such undertaking or any other person to nominate or appoint any person to be a director of the undertaking. Mr. Datta pointed out that here also reference has been made to the share holders and/or directors of the undertaking, which again implied that the legislature intended the use of the word 'undertaking' to be synonymous with the company itself. Mr. Datta aso referred to the provisions of Section 18FG of the said Act which provides for preparation of an inventory of assets and liabilities and list of members and creditors of the company, the management of whose industrial undertaking had been taken over under the provisions of the Industries (Development and Regulation) Act, 1951. The provisions of Section 18FG of the said Act imposes an obligation on the authorised persons to prepare a complete inventory of all properties, movable and immovable, including lands, buildings, works, workshops, stores, instruments, plant, machinery, automobiles, raw-materials, cash balances, and generally all other assets of the industrial undertaking and all books of accounts, registers, maps, plans, sections, drawings, records, documents of title of ownership of property and all other relevant documents, together with all borrowings, liabilities, obligations of whatever kind of the company. The authorised persons are also required to prepare separately a list of members and list of creditors of such company as on the date of taking over of the management of the industrial undertaking, showing separately in the list of creditors, the secured creditors and the un-secured creditors. Mr. Datta pointed out that Section 18FG would make it absolutely clear that the legislature did not intend to differentiate between the three expressions used in the aforesaid Act, as otherwise, provision would not have been made for making a complete inventory of all the assets of the undertaking, including books of accounts and all borrowings, liabilities and obligtions of whatever kind of the company. It would not also have been necessary to prepare a list of members and a list of creditors of thecompany as on the date of taking over of the management of the industrial undertaking, unless it necessarily meant the take over of the management of the company also.
36. In support of his aforesaid contention, Mr. Datta referred to the case of Rashtriya Mill Mazdoor Sangh, Nagpur v. The Model Mills Nagpur, reported in : (1984)IILLJ507SC , and also to the case of Food Corporation of India Workers' Union v. Food Corporation of India, reported in : [1985]3SCR150 . The first case is an authority on the point that even after the take over of the management of an industrial undertaking under the provisions of the Industries (Development and Regulation) Act, 1951, it did not become one engaged in industries carried on under the authority of the department of the Central Government and neither were its employees excluded from the operation of the Bonus Act. In the second case, the Supreme Court was called upon to consider certain provisions of the Contract Labour (Regulation and Abolition) Act, 1970, where the decision in the case of Rashtriya Mill Mazdoor Sangh, Nagpur, was also referred to. The second case does not appear to be of much relevance to the facts of this case.
37. Mr. Datta submitted that the findings and ultimate decision of the learned single Judge did not warrant any interference in the appeal and the same was liable to be dismissed.
38. On a careful consideration of the submissions made on behalf of the respective parties and the facts and circumstances of the case, it is clear that the decision in the appeal will depend on the interpretation of the relevant provisions of the Industries (Development and Regulation) Act, 1951 and the Inchek Tyres Ltd. and National Rubber . (Nationalisation) Act, 1984.
39. Section 18A of the Industries (Development and Regulation) Act, 1951, empowers the Central Government to assume the management or control of an industrial undertaking in cases where an industrial undertaking has failed to comply with thedirections given under Section 16 of the Act or where an industrial undertaking in respect of which an investigation has been made under Section 15 of the said Act is found to be managed in a manner which was highly detrimental to the industries concerned or to public interest. The notified order issued by the Central Government in this behalf is to remain operative for a period not exceeding 5 years. Section 18AA of the said Act provides that even without any investigation, the Central Government can take over the management of an industrial undertaking in the circumstances mentioned in clauses (a) and (b) of Sub-section (1) thereof. A notified order under Section 18AA is also to remain operative for a period not exceeding 5 years.
40. Sub-section (5) of Section 18AA provides that the provisions of Sections 18B and 18E of the said Act shall, as far as may be, apply to, or in relation to, the industrial undertaking, in respect of which a notified order has been made under Section 18A of the said Act.
41. It is now to be seen as to whether the provisions of Section 18B of the aforesaid Act would be applicable as far as the management of the defendant No. 1 is concerned.
42. As has been mentioned hereinbefore, Section 18B of the aforesaid Act provides that on the issuance of a notified order under Section 18A authorising the taking over of the management of an industrial undertaking, all persons in charge of the management, including persons holding offices of managers or directors of the industrial undertaking immediately before the issue of the notified order shall be deemed to have vacated their offices. Sub-clause (e) of Section 18B(1) relates to the take over of the management of an industrial undertaking 'which is a company'. It provides that the authorised persons appointed under Section 18A to take over the management of an industrial undertaking 'which is a company', shall be for all purposes the Directors of the industrial undertaking duly constituted under the Indian Companies Act and shall alone be entitled to exercise all the powers of theDirectors of the industrial undertaking, where such powers are derived from the said Act or from the Memorandum or Articles of Association of the industrial undertaking or from any other source. It appears to us that the legislature was consciously making a distinction in respect of industrial undertak-ings 'which are companies' within the mean-ing of the Indian Companies Act and industrial undertakings 'which are owned' by the companies concerned. Otherwise, there would have been no reason for including Sub-clause (e) in S. 18B(1). There would have been no reason also for the legislature to have categorised industrial undertakings which are companies by themselves in the said Sub-clause. It appears to us that the legislature was quite conscious of the fact that there are industrial undertakings which are companies by themselves and other industrial undertakings which are owned by companies. Accordingly, the legislature thought it fit to introduce Sub-clause (e) into S. 18B(1). In this context, the meaning of Sub-clause (a) of S. 18(1) becomes clear. To our mind, what is intended in Sub-clause (a) of S. 18B(1) is that persons in charge of the management of industrial undertakings taken over u/S. 18A or S. 18AA, would have no further control over the industrial undertaking in question, irrespective of whether such undertakings were owned by a company or were companies themselves. Such an interpretation is only logical, since the management of the undertaking was being taken over by the Central Government to the exclusion of the company which was so long managing the same. In our view, Sub-clause (a) of S. 18B(1) does not mean that the management of the company itself, where the industrial undertaking is not itself a company, was meant to be taken over. The distinction has been made clear by the inclusion of Sub-clause (e) in S. 18B(1).
43. As far as S. 18E of the said Act is concerned, the said provisions clearly refer to an industrial undertaking 'being a company', which can be equated with the expression industrial undertaking 'which is a company'. In such cases the provisions of S. 18E would be applicable and not in cases where an industrial undertaking 'owned by a com-pany' is taken over by a notified order issued either u/S. 18A or S. 18AA of the said Act.
44. In our view, although, the provisions of S. 18FG of the said Act apply to all industrial undertakings covered by the three expressions referred to hereinabove, the said provisions do not necessarily mean that the management of the company which owns the industrial undertakings is also taken over, when a notified order is issued u/S. 18A or 18AA of the above Act, as has been submitted by Mr. Datta. In our view, the provisions of S. 18FG relate to only the undertaking in cases where the industrial undertaking is owned by a company.
45. In our view, the three expressions referred to hereinabove have been consciously used by the legislature to differentiate between industrial undertakings which are themselves companies within the meaning of the Companies Act, and such industrial undertakings which are owned by companies. In cases where an industrial undertaking is owned by a company, the management of the undertaking after take over becomes severed and separated from the company itself. This necessitates the establishment of an infrastructure for management of the industrial undertaking when it is taken over and comes under the control of a new management, namely, the 'authorised person', referred to in S. 18A of the aforesaid Act.
46. The aforesaid view taken by us will be further strengthened by the provisions of the Nationalisation Act of 1984. Section 3 of the Nationalisation Act provides that on the appointed day, the undertakings of the two companies covered by the Act and the right, title and interest of each of the two companies in relation to its undertakings shall stand transferred to and shall vest in the Central Government. In our view, S. 3 itself makes a conscious distinction between the undertakings of the National Rubber . and the company itself. Section 3 provides for vesting only of the undertakings of the company in the Central Government and not the company itself.
47. The position has been further clarifiedby virtue of the provisions of Sub-sec. (6) of S. 4 of the Nationalisation Act which makes it clear that pending litigation in relation to any property which vested in the Central Government u/S. 3, instituted or preferred by or against the National Rubber ., would not abate or be discontinued or be, in any way prejudicially affected by reasons of the transfer of the undertakings of the Company, but the same could be continued, presented or enforced by or against the Central Government, or where the undertakings of the company vested u/ S. 6 or S. 7 in an existing or new Government company, by or against such company.
48. The intention of the legislature, to differentiate between industrial undertakings of the Naiional Rubber . and the company itself is evident in S. 5 of the Nationalisation Act. For the purpose of this appeal, we are only concerned with sub-sec. (1) and sub-sec. (2) of S. 5 of the Nationalisation Act. Sub-sec. (1) makes it absolutely clear that it was the intention of the Central Government to take over the management only of the two undertakings of the defendant No. 1 company and not the management of the company itself. Sub-sec. (1) provides that every liability, other than the liability specified in Sub-sec. (2) of S. 5 of the National Rubber . in respect of any period prior to the appointed day would be the liability of the company and would be enforceable against it and not against the Central Government. This, in our view, clinches Mr. Chatterjee's submissions that both in terms of the notified orders issued u/Ss. 18A and 18AA of the Industries (Development and Regulation) Act, 1951 and the provisions of the Nationalisation Act, 1984, the intention of the Central Government, as also the legislature, was that the management of any of the two undertakings of the defendant No. 1 company and not the management of the company itself was to be taken over.
49. Sub-sec. (2) of S, 5 further provides that any liability arising in respect of materials supplied to National Rubber . after the undertakingshad been taken over by the Central Government would, on and from the appointed day, be the liability of the Central Government or of the existing or new Government company and shall be discharged by the Government or the existing new Government Company.
50. On the basis of the view taken by us, we are inclined to accept the contention of Mr. Chatterjee that the management of the company itself had not been taken over by the Central Government and we are of the view that the learned single Judge erred in proceeding on the footing that the defendant No. 1 company itself had been nationalised under the Nationalisation Act, 1984, and the management of the defendant No. 1 company itself had been taken over by the Central Government. In fact, Mr. Datta conceded that despite the issuance of the two notified orders and the promulgation of the Nationalisation Act, 1984, the company continued to exist. Having come to such a conclusion, the learned single Judge misinterpreted the provisions of sub-sec. (6) of S. 4 and S. 5 of the Nationalisation Act, 1984, and arrived at the erroneous conclusion that the management of the defendant No. 1 company had been taken over by the Central Government and that, as a consequence, Nikus Kumar Sarkar could rightly act for and on behalf of the company.
51. In our view, the decision of the learned single Judge was further influenced by an erroneous appreciation of the observations made by the Full Bench of the Punjab and Haryana High Court in the case of Radharam Badrinath v. M/s. Amritsar Sugar Mills Ltd. (AIR 1978 Punj & Har 129) (supra). In our view, the portion of the said judgment referred to and quoted by the learned single Judge in his judgment does not help the case of the appellant Bank, since the same was being made with reference to an industrial undertaking 'being a company' or an industrial undertaking 'which is a company'. The Full Bench very rightly observed that wherever the said two aforesaid expressions are used, they are intended to refer to the whole of the company, unless a part thereof is clearly referred to. The learnedsingle Judge appears to have missed the subsequent observations of the Full Bench in relation to an industrial undertaking 'owned by a company', which is of relevance in this case. In fact, the very next sentence of the portion of the Full Bench decision quoted by the learned single Judge clarifies the position. For a proper appreciation of the observations of the Full Bench in their entirety, we are setting out the relevant portions herein-below :--
'Whenever the reference is to an industrial undertaking 'being a company' or an industrial undertaking 'which is a company' the expressions are intended to refer to the whole of the company unless a part thereof is clearly referred to. Where on the other hand reference is to an undertaking owned by a company it is intended to cover the undertaking or part thereof in respect of which some order has been passed and not necessarily the entire undertaking of the company.'
52. The said observations of the Full Bench, in our view, clearly explains that the legislature deliberately chose to use the said three expressions separately and in different cases. In the light of the view taken by us, we must hold that the learned single Judge misconstrued the observations of the Full Bench by quoting out of context only a part of and not the whole of the observations of the Full Bench regarding use of the three expressions referred to above in different sections of the Industries (Development and Regulation) Act, 1951.
53. In our view, instead of supporting the case sought to be made out by the plaintiff Bank, the Full Bench decision of the Punjab and Haryana High Court supports the contention advanced on behalf of the appellant.
54. For the aforesaid reasons, we hold that the National Rubber . continued to have a separate existence, even after the publication of the two notified orders dated 23rd December, 1977 and 10th February, 1978, respectively, and despite the promulgation of the Nationalisation Act, 1984.
55. We also hold that in view of the provisions of Sub-sec. (6) of S. 4 of the Nationalisation Act, 1984, the suit will not abate if it relates to and concerns any of the two undertakings of the defendant No. 1 company which have vested in the Central Government, and the plaintiff Bank can continue the same against the Central Government, but as the management of the company itself has not been taken over by the Central Government and the company continues to have a separate existence, neither the Central Government nor its representative, in the present case the 'authorised persons', can represent the defendant No. 1 company in the suit.
56. In view of the above, we further hold that Nikus Kumar Sarkar was not competent to represent the defendant No. I company in the suit by filing Vakalatnama and/or by verifying the written statement on its behalf.
57. As far as the submissions of Mr, Datta regarding the competence of one defendant to pray for the rejection of a written statement filed by another defendant is concerned, we are not really called upon to decide whether Nikus Kumar Sarkar was entitled to represent the defendant No. 1 company in the suit, and we have found that he was not competent to do so.
58. The appeal is, therefore, allowed, and we directed that both the Vakalatnama executed by Nikus Kumar Sarkar and the written statement verified by him on 10th February, 1980, purportedly on behalf of the defendant No. 1 company, be taken of the file.
59.There will be no order as to costs.
Paritosh Kumar Mukherjee, J.
60. I agree.
61. Appeal allowed.